Wednesday, September 22, 2010

Economic Transformation Programme: A context

The Economic Transformation Programme (ETP) was bound to generate much chatter in the mainstream media, blogosphere and, of course, warungs and kopi tiams. The Government's point-man, Idris Jala, is once again, in the limelight.

There are a few observations that I wish to make. And, no, the observations are not wonky economics analysis (too much work! I'll wait for bloggers like etheorist and hishamh to offer their insights on it).

Here we go.

First, I recall that the whole point of Idris Jala and his Labs was to engender a consultative approach with as many Malaysians as possible, from as many stakeholding clusters as possible, so that a broadbased buy-in from Malaysians can take place.

To the Malaysian Government's credit, this is precisely what Idris Jala and his team has done. All the chatter, good, bad, cynical, positive, effusive and downright rude, reflects precisely this intent. It is a good thing albeit patchy in terms of quality of thought and analysis.

The whole point of the exercise is to set an agenda for discussion on Malaysia's economic future; our collective future. I believe this is being achieved.

Second, the ETP and other economic proposals emanating from Idris Jala's Labs have been accused of being long on rhetoric but short on specifics. I have also made similar observations. That said and, in fairness, Idris Jala's brief was to set the vision and parameters of the Malaysian economy's strategic goals. If we recall de Bono's injunction, there is a big difference between strategic goals and tactical planning.

Strategic goals embodies a clear vision and clear, but, broad objectives. This is the ETP. Tactical planning and implementation takes place within the parameters set by the strategic goals. This is the Tenth Malaysia Plan (10MP). This is why I am non-plussed by comments made at the sidelines of Idris Jala's recent ETP briefing about the lack of details. We should be trying to help Idris Jala and his team fill in the details by our constructive comments and analysis.

Third, and, this is only my observation, the recent excoriation of Perkasa by UMNO leaders points to a clear awareness that the negative sentiments catalysed by crude racialist remarks and, the expected and, equally negative responses, has not done Malaysia's economic investment climate any good at all. The nexus between the two also contradicted the stated policy of inclusiveness that was touted by the Prime Minister himself last year.

I have not really touched on anything Perkasa because there is hardly any real substantive contribution offered by them for consideration, analysis and examination save for generating polemics and emotions. And, in the book of the businessman and investor, emotions are often irrational and unreliable. There may be some votes to be had in it. But, there's no money to be had - investment money, that is.

So, the distancing is a necessary tactical move.

I don't believe for one moment that by distancing itself from Perkasa the UMNO leaders are abandoning or diluting the Bumiputra economic agenda. That will never happen. It will never happen simply because there is a real issue of the Bumiputra being an economic laggard. Any sensible Malaysian economic policy that is soaked in realpolitik must address the challenge of bootstrapping the Bumiputra economic development. That said, the corollary issue is whether UMNO has lost the plot on developing the Bumiputra community due to the myopia caused by greed and corruption.

This is the issue that troubles the Malaysian voter and investors. This is the perception that Idris Jala and the ETP can never, ever deal with. It is something that only UMNO can deal with by way of cleaning UMNO's own Augean stables.

Fourth, and, finally, and this is linked to the third point above, there is a trust deficit between the Malaysian voter and Barisan Nasional. The trust deficit is caused by the disconnect between what the BN-led Federal Government has been doing since March, 8 2008 until today in the form of day-to-day contact between the rakyat and kerajaan, the mega deals and mega scandals that still dogs and, the attractive strategic vision offered by 1Malaysia and the ETP.

4 comments:

Anonymous
said...

The ETP invites private participation but it hasn't detailed how they will be invited.

Yet analysts are already naming the companies whose stocks they think will be jelling.

Therefore no one can fault the rakyat for thinking the deals are already wired in which case the consultation they were asked to provide seems more a catchy drawing tactic serving only to reinforce their suspicion it is all dejavu again of the free-flow cronyism rendered by past Umno administrations. Is it any wonder then that the trust deficit has yawned further?

What has happened to the idea of competitive open proposals? Are politicians so prescient to know there won't be more comprehensive and cost-effective proposals from other parties not even identified for the objectives in mind?

Furthermore, majority private participation doesn't mean the government will be sheltered from having to sponsor or provide guarantees to financiers funding the private sector players in which case the rakyat cannot be faulted from worrying that their provident funds will be used again to shore up the share prices of the players involved or the government of the future will be legally obligated to bail out projects if times change dramatically and the new concessionaires default with the government as project beneficiary left holding the baby of social responsibility.

People still remember how during the Asian crisis shares not in hand were collateralized for loans already burnt. As a corollary, people still rankle over what Umno had done with shares of MAS and other listed GLCs.

If fortunes can change for even a superpower like the US, how unlikely won't it for a minimart like ours, especially when our economy is founded on trade and especially when Umno's administration is known for not reading the fine prints of legal documents, whether by omission or commission?

These are matters which add a historical perspective to powdered powerpoints. Don't they?

The burning platform seems to be income distribution. The basic premise now is that the rich will get even richer while the poor will be consumed by the CPI. After all high income also means high price.

In what way can the majority of the rakyat play meaningful roles in the ETP projects when they only have basic education and can't possibly demand higher incomes? If the projects deliver to them higher wages for their basic services, then it must be at the expense of wage-based national productivity. We are talking about a ten-year period. If people have been soothed to snooze for fifty years, they cannot suddenly wake up to marvelous, world-class, high-value output in ten, can they?

Which means the economy will become lumpier in that ten, starting tomorrow, for none of the projects which are basically infrastructure and real estate building will require any level of innovativeness that underpins future relevance of our national industries, including the agro-based sector, if you will, and that's because we don't do research.

Otherwise one of the UM heads wouldn't have had to write a letter to the media lamenting exactly that as the reason for why UM has been lopped off the THES ranking again, as measured by the ISI database of cited publications its staff cannot produce.

Meanwhile as all this is dawning even deeper into our scrambled psyches, we see the same political maneuverings being unfurled before the long-suffering rakyat.

Hello there, the rakyat have been fed enough shit they will be declared unfit for cremation on grounds of environmental control.

What is the present government going to do to upgrade the SMEs? When will it tell chauvinists to wake up to reality that:

(a) the government doesn't have any more money to win votes by doing monoracial charity,

(b) the government can no longer distort one clause of the constitution to ballast a race when there are other clauses of the same constitution which tellingly scorch the government's unfair hand in policy implementation inasmuch framing;

(c) the country has suffered irreparable damage to its reputation and relevance by advancing affirmative instruments which deplete communal brains and national gains for the political expedient of personal accounts and public votes, and

(d) the race to be helped up ends up expecting to be helped up all the time from one generation to the next and at the expense of others who do honest work and make salutary sacrifices?

The old simple honest way of cause leading to effect, merit leading to achievement, hard work leading to good results ... all blown.

The only way the gordian knot can be cut to get through all this mess is to understand the prime motive force in the coming years. It is investments. Without that, the economy will go into the twilight.

And investors will not come if they see sleighted handiwork in dispensations and reward. This has been proven again and again in the last thirty years. That also explains our financial predicaments today. Which explains why the ETP and all have had to be crafted. For want of brighter ideas. Which however doesn't erase the trust deficit. All the more because it is built on memories of past bad governance.

See the oxymorons and paradoxes? All because of parachuted morons.

Let's ponder this further. Something stronger is called for. A gitane is suggested.

“The few who can understand the system will be either so interested in its profits, or so dependent on its favours, that there will be no opposition from that class...

While, on the other hand, that great body of people, mentally incapable of comprehending the tremendous advantage that Capital derives from the system, will bear its burden without complaint and, perhaps, without even suspecting that the system is inimical to their interests” - Mayer Amschel Bauer Rothschild

It is understood that APCO has hired "more local consultants" for the new contract, which sources in the Prime Minister's Department say is not as lucrative as the whopping RM76.8 million paid for the first year from July15, 2009 to June 4, 2010 in exchange for its public relations services to boost Malaysia's image internationally..." Unquote.

US poverty: From bad to worse? - http://www.youtube.com/watch?v=S9-NPWhcfIA&feature=related

U.S. National Debt Clock : Real Time - http://www.usdebtclock.org/It is just round the corner!

Is Bolehland "Padded" with any Contingency Plan for the inevitable 2nd Financial Tsunami between now and 2011?

Already the "Neglected Taxpayers" are having to rough it out trying to make ends meet; pay increasing tolls but the traffic jams are getting worse (Gridlock jams to get to work & getting back home!), having to pay for their own security patrols in housing estates including Bangsar, etc, etc, etc!